Nakheel to complete debt restructuring by year-end

DUBAI — Nakheel PJSC, Dubai’s leading real estate developer and part of Dubai World, said on Thursday that it expects to finish debt restructuring by the end of this year.

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Published: Fri 24 Sep 2010, 11:37 PM

Last updated: Mon 6 Apr 2015, 11:53 AM

“The restructuring is well advanced and we are in discussions with banks. We had 85 per cent acceptance and we’re waiting for the 95 per cent target,” Nakheel Chief Executive Officer Chris O’Donnell said.

Under Nakheel’s complex restructuring plan, first unveiled a few months ago, trade creditors have been offered 40 per cent of what they are owed in cash and the rest through an Islamic bond, or sukuk. Last month, Nakheel said it had settled Dh2.5 billion of the Dh4 billion it owes to trade creditors.

Earlier this month, Dubai World, Nakheel’s parent and one of Dubai’s three main holding companies, said it secured approval from creditors to change the terms on $24.9 billion of debt.

In June, Nakheel said it started making 40 per cent cash payment to trade creditors. “The announcement marks significant progress in our recapitalization plan following on from the initial payments to trade creditors of Dh500,000 or less which commenced in March.”

Trade creditors who were owed more than Dh500,000 were offered full repayment by the developer with 40 per cent in cash and 60 per cent via an Islamic bond, which has a 10 percent annual return. The move follows initial payments to trade creditors owed Dh500,000 or less which began in March.

The Dubai government in March pledged to pump $8 billion into Nakheel and said it will take over its ownership from Dubai World after the restructuring.

On Wednesday, the cash-strapped developer said it restarted work on its Al Furjan residential project and expected to start building again on all short-term projects by the end of October.

Al Shafar Transport and Contracting Co is the first contractor to restart work on Al Furjan, Nakheel said. Al Shafar’s contract to build 300 of the 800-villa project is worth Dh573 million and expected to be completed by the end of 2011 with some handed over earlier, managing partner Tarek Zoabi told reporters on Thursday.

Arabtec, which won a Dh3 billion deal in June 2008 to build 1,500 homes at Al Furjan, has yet to resume work despite receiving 40 per cent of what it was owed from Nakheel in July. The company left the site in January after completing 500 homes.

On Tuesday, Nakheel said it disputed the validity of a creditor claim filed against it by Dubai-based Construction Delivery Group (CDG), saying the claim would not delay its debt deal.

CDG is the first trade creditor that had filed a lawsuit against Nakheel with a special tribunal set up to handle disputes over its debt restructuring.

CDG’s lawsuit contends that it is owed Dh50 million UAE in principal, interest and damages related to a facilities management contract for properties at the Palm Jumeirah, one Dubai’s three artificial palm-shaped islands.

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